Paragon to enter into joint v

RNS Number : 9120V

Obtala Resources Limited

10 November 2010

 



Obtala Resources Limited

 ("Obtala" or "the Company") (AIM:OBT)

Paragon Diamonds Limited to enter into joint venture

The Board of Obtala Resources Limited, the resources investment, development and production company, today announces that its majority owned subsidiary, Paragon Diamonds Limited entered into heads of terms which will lead to a joint venture agreement will be with International Diamond Consultants Limited ("IDC")  in respect of its 85% owned subsidiary Meso Diamond (Pty) Limited ("Meso"). Grandinex International Corp. which is a company controlled by Frank Scolaro owns 44.3% of IDC. The independent directors of Obtala, that is the directors of the Company excluding Frank Scolaro, having consulted with their nominated adviser, ZAI Corporate Finance Limited, consider that the terms of this transaction are fair and reasonable insofar as the Company's shareholders are concerned.  

The full text of the announcement released by Paragon Diamonds Limited is set out below.

Contact:

Obtala Resources Limited
Simon Rollason - Managing Director Frank Scolaro - Chairman www.obtalaresources.com	[phone]
ZAI Corporate Finance Ltd
Richard Morrison / Sarang Shah	[phone]
Threadneedle Communications
Laurence Read	[phone]

Paragon Diamonds Limited

("Paragon" or the "Group")

(AIM: PRG)

Heads of Agreement Signed for Lemphane kimberlite Joint Venture in Lesotho

Highlights:

·      Paragon to enter into Joint Venture ("JV") for Lemphane kimberlite in Lesotho

·     Earn in agreement to acquire  10% stake

·      An investment of up to $2 million in cash/shares

·      Evaluation work to begin immediately

Paragon Diamonds Limited, the African focused diamond development and production company today announces that it has entered into a Heads of Agreement ("HoA"),  with a view to forming a JV with International Diamond Consultants Limited ("IDC"),  in respect of its 85% owned subsidiary Meso Diamond (Pty) Limited ("Meso"). IDC is a private British Virgin Islands registered company focussed on evaluating and developing diamond projects in sub Saharan Africa.

Meso holds a 100% interest over the Lemphane prospecting licence which covers a known Kimberlite pipe in the world renowned diamondiferous region of the Kingdom of Lesotho. Lesotho is rapidly emerging as an important diamond district with positive results from the established Kao, Letseng and Liqhobong kimberlites. There are no profits attributable to Meso.

The Lemphane licence covers an area of 6.33 km² in the Botha-Buthe district of northern Lesotho, and lies 29 km west of the Letseng Diamond Mine and 5km north west of the Liqhobong Deposit. The prospecting licence is valid until June 2012. Following expiration of the prospecting licence and positive completion of the exploration programme Meso has the right to apply for and negotiate a Mining Lease on all or part of the licence area.

The JV, to be established within 30 days of this announcement, will mean that Paragon will acquire an interest of 10% of Meso following the expenditure of $2,000,000 on Lemphane as follows:

·      An initial cash payment of $500,000 payable immediately to fund bulk sampling, construction of the exploration camp, water dam construction and independent sampling analysis

·      A further $500,000 to advance the second phase of the exploration work payable in cash six months following the completion of the JV agreement

·      A final payment of $1,000,000 payable in cash or shares in Paragon (at the election of Paragon) twelve months following the signing of the JV agreement.

The funding will be provided specifically for the purpose of funding the exploration work to take the Lemphane project to pre-feasibility status.

In addition to the interest in Meso, Paragon will also obtain an option over 5% of IDC's share capital at a value of $0.60 cents per share at a cost of  approximately $1.2m at the current issued share capital of IDC.

Grandinex International Corp. which is a company controlled by Frank Scolaro owns 44.3% of IDC. The independent directors of Paragon, that is the directors of the Company excluding Frank Scolaro, having consulted with their nominated adviser, ZAI Corporate Finance Limited, consider that the terms of this transaction are fair and reasonable insofar as the Company's shareholders are concerned.

Commenting today Frank Scolaro, Executive Chairman, said: "I am delighted to announce Paragon will be acquiring an interest in the Lemphane kimberlite pipe located within a rapidly expanding diamond region of the world. The diamonds produced from Lesotho are some of the highest value in the world and this agreement will enable Paragon to diversify into hardrock exploration and development and other geographic regions whilst maintaining its key focus on increasing production at our Konoma Mine in Sierra Leone"

 

END

 

 

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